Question:

What is SLR?

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SLR is used by central banks to control inflation, regulate credit, and ensure the liquidity of commercial banks.
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Solution and Explanation

Step 1: Understanding SLR.
SLR stands for Statutory Liquidity Ratio. It is the minimum percentage of a commercial bank's net demand and time liabilities (NDTL) that it must maintain in the form of liquid assets such as cash, gold, or government-approved securities. This ratio is set by the central bank, i.e., the Reserve Bank of India (RBI) in India.

Step 2: Conclusion.
Thus, SLR is a requirement that banks must fulfill to ensure liquidity and control credit expansion.

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